TEN_09-21_Attachment-1_acc.pdf

ETA Advisory File Text

WORK OPPORTUNITY TAX CREDIT Quick Reference Guide for Employers REQUEST Did you know that in 2020 State Workforce Agencies issued 1.6 million certifications to employers seeking a Work Opportunity Tax Credit WOTC WHAT IS WOTC The WOTC is a federal tax credit available to employers who invest in American job seekers who have consistently faced barriers to employment. Employers may meet their business needs and claim a tax credit if they hire an individual who is in a WOTC targeted group. Employers must apply for and receive a certification verifying the new hire is a member of a targeted group before they can claim the tax credit. After the required certification is secured taxable employers claim the WOTC as a general business credit against their income taxes and tax- exempt employers claim the WOTC against their payroll taxes. BENEFITS TO EMPLOYERS The credit available ranges from 2 400 up to 9 600 depending on the targeted group and qualified wages paid to the new employee generally during the first year of employment. Generally the credit is 40 of qualified first-year wages for individuals who work 400 hours in their first year of employment. HOW CAN EMPLOYERS FIND JOB CANDIDATES IN WOTC TARGETED GROUPS The American Job Centers and partnering agencies and programs can help employers connect with skilled job seekers who may be in a targeted group for the WOTC. American Job Centers AJCs can assist employers in recruiting talent hosting job fairs conducting skills assessment and providing support to workers transitioning to new jobs. Some jobseekers may also be pre-certified as in a WOTC targeted group. This pre-certification can be helpful but is not required for hiring or claiming the tax credit and job candidates that may be a good fit for your business and eligible for the WOTC may not have a pre-certification. A state workforce agency SWA or participating agency can determine whether a job seeker may be in a WOTC targeted group and note this determination with a Conditional Certification ETA Form 9062. The state agency then gives that pre- certification to the job-ready applicant to use during their job search. The Conditional Certification serves an as official record of WOTC pre-certification by Alerting prospective employers to the availability of the tax credit if the individual is hired and Providing a means for employers to request a WOTC certification for the job applicant new hire. A participating agency is a federal state county or local government agency or a grantee of these agencies. Examples of participating agencies may include American Job Centers Vocational Rehabilitation agencies City and county social service offices Department of Corrections Veterans Administration and related service organizations Workforce Innovation and Opportunity Act WIOA grant recipients State Workforce Agencies SWA are authorized to administer the WOTC certification process and coordinate with American Job Centers and partnering agencies to help employers connect with skilled job seekers who may be in WOTC targeted groups. Employers should contact their SWA for assistance connecting with partnering agencies and filing WOTC certification requests. HOW CAN EMPLOYERS GET STARTED WITH WOTC Learn how to file a certification request by visiting the U.S. Department of Labor WOTC website at https www.dol.gov agencies eta wotc. View eligibility criteria for WOTC targeted groups in the WOTC Desk Aid or visit the IRS website at https irs.gov businesses small-businesses-self-employed work- opportunity-tax-credit. OTHER HIRING INCENTIVES FOR EMPLOYERS Employers can expand their hiring practices with the WOTC or with other programs such as the Federal Bonding Program FBP or Employee Retention Credit ERC under the American Rescue Plan Act. The Federal Bonding Program FBP . Employers can receive fidelity bonds free of charge when hiring certain job applicants. The bonds reimburse the employer for any loss due to employee theft 5 000 up to 25 000 and cover the first six months of employment at no cost to the job applicant or the employer 0 deductible . Fidelity bonds can be applied to ANY job ANY state and to ANY employee excluding a self-employed individual who is paid wages and has Federal taxes automatically deducted. To date FBP has issued over 50 000 bonds. Gain access to tools that help employers integrate the FBP into hiring endeavors by calling 1-877-US2-JOBS 1-877-872-5627 or visit the Bonds4Jobs website https bonds4jobs.com resources. The Employee Retention Credit ERC . Under present law the ERC is a refundable tax credit against certain employment taxes equal to 50 of the qualified wages paid by an eligible employer after March 12 2020 and before January 1 2021 and 70 of qualified wages paid by an eligible employer after December 31 2020 and before January 1 2022. Eligible employers can get immediate access to the credit by reducing employment tax deposits they are otherwise required to make. For example a small business employer that hires an individual released from prison following incarceration for a felony within the last twelve months and employs the individual from July 1 2021 through December 31 2021 could qualify for a credit of up to 16 400 for that employee by claiming both the WOTC and the ERC provided that the same wages are not used to calculate the WOTC and the ERC. For more information on the ERC visit the IRS website https www.irs.gov newsroom new-law-extends-covid-tax-credit-for-employers- who-keep-workers-on-payroll. WOTC Quick Reference Guide for Employers